Analysts Just Slashed Their GCL Technology Holdings Limited (HKG:3800) Earnings Forecasts

One thing we could say about the analysts on GCL Technology Holdings Limited (HKG:3800) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the latest consensus from GCL Technology Holdings' 15 analysts is for revenues of CN¥24b in 2024, which would reflect a notable 9.4% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 92% to CN¥0.014. Before this latest update, the analysts had been forecasting revenues of CN¥27b and earnings per share (EPS) of CN¥0.047 in 2024. So we can see that the consensus has become notably more bearish on GCL Technology Holdings' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for GCL Technology Holdings

The consensus price target fell 6.8% to CN¥1.43, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on GCL Technology Holdings, with the most bullish analyst valuing it at CN¥1.82 and the most bearish at CN¥1.10 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that GCL Technology Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.4% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than GCL Technology Holdings.

The Bottom Line

The biggest low-light for us was that the forecasts for GCL Technology Holdings dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of GCL Technology Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for GCL Technology Holdings going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.